The tax levied by the local taxing ordinances on any transaction in which a
part of the sales price is represented by an article traded in, shall be calculated on the
total sales price less the market value of the article traded in. At such time as the
article taken in trade is sold, tax shall be collected on the sales price thereof.

Rule 27. Credit and Installment Sales

A. Persons making credit sales or installment sales
must report the total sales price of any such sales and remit the sales tax on such total
in the monthly report due for the month in which the contracts of sales are executed.

B. The foregoing applies even where such sellers arrange to
receive payment of tax in installments or where the contract is discounted, pledged or
sold to a finance company.

C. No deductions for credit losses in case of repossession are
allowable.

Rule 28. Lay-Away Sales

A sale whose delivery is conditional on payment of the amount due is not
completed until the amount due is received by the seller; therefore, it is not taxable
until the sale is completed. However, tax is due on the total sales price, whenever the
seller delivers the merchandise to the purchaser, regardless of payment terms.

Rule 29. Gift Certificates

A. The sale of gift certificates by a restaurant, department
store, etc., is not taxable, since the gift certificate is merely a means of payment
similar to cash or check. The sale for which the gift certificate is used as a means of
payment is taxable and the proper tax must be collected.

B. The redemption of the gift certificate by the issuing
restaurant, department store, etc., is subject to tax.

Rule 30. Total Tax Collected Must be Remitted

Every dealer is required to make returns to the Finance Director of the total amount of
the tax collected from his purchasers. In cases where the total amount of taxes collected
under the ordinances exceeds the percentage applicable to the particular transactions
involved, any such excess must be remitted to the Finance Director. Failure to remit is a
criminal offense. Refer to the local ordinance for more details.

Rule 31. Prescription of Taxes Collected but Not Remitted

When a dealer collects sales taxes and fails to remit them to the taxing
authority, a prescriptive period of ten years applies.

Rule 32. Sales by Certain Fiduciaries

When trustees, receivers, executors, and administrators by virtue of their
appointment continue to operate, manage or control the business engaged in selling
tangible personal property at retail or selling services or leasing tangible personal
property, they must remit the tax applicable to those transactions. It is immaterial that
such officers may have been appointed by a federal court. They are deemed to be persons
engaged in the business of selling or leasing tangible personal property or services.

Rule 33. Sales to Employees

When a dealer sells tangible personal property to his employees for use or
consumption, such sales must be included in his gross taxable sales and the tax on each
such sale shall be collected. It is immaterial that such dealer makes sales at retail only
to his employees and not to the general public.

Rule 34. Occasional or Casual Sales

A. Occasional and/or casual sales made by persons who are not
engaged in the business of selling tangible personal property are not subject to tax.

B. Manufacturers, processors, wholesalers or jobbers engaged in
distributing tangible personal property, who sell primarily other than at retail, are not
deemed to be making casual or isolated sales when they sell such tangible personal
property to purchasers for use or consumption, notwithstanding that such sales may
comprise a small fraction of their total business.

C. The exclusion of "occasional or casual" sales does
not apply to the sale of motor vehicles nor to lease or rental transactions.

A. According to Act 1266 of 1999, tangible
personal property purchased for the purpose of being leased or rented is
excluded from local sales and use taxes. The exclusion is phased-in as
follows:

Beginning July 1, 1999, and ending June 30, 2000, one-fourth (1/4) of the
sales or cost price is excluded.

Beginning July 1, 2000, and ending June 30, 2001, one-half (1/2) of the
sales or cost price is excluded.

Beginning July 1, 2001, and ending June 30, 2002, three-fourths (3/4) of
the sales or cost price is excluded.

Beginning July 1, 2002, purchases of tangible personal property for lease
or rental purposes will be totally excluded from sales and use taxes.

The lessor or renter (rental dealer who owns the property) will owe local
sales and use tax on the "sales price" or "cost price" of
movable property purchased that is not excluded from local sales and use
tax. Automobiles and motor vehicles purchased for rental/lease are
exempt from local sales and use tax as provided in Rule 35(K).

B. The lease or rental of tangible personal property
constitutes a taxable transaction. The terms "lease or rental," as defined in
the ordinances, have their commonly accepted meaning, which is the granting of possession
or use of tangible personal property by the owner thereof to another person for a
consideration without the transfer of title to the property. The following criteria should
be used when determining the situs of lease and rental transactions:

Lease transactions other than automobiles or motor vehicles.

a. The local sales/rental tax will be due where the rental property is used.

b. The lessor must determine, with written documentation, where the leased/rented
property will be used. The rental company must register and remit sales/rental tax
to the local taxing jurisdiction where the leased/rented equipment is used.

c. If the rental company is unable to determine where the leased/rented property
will be used, then the local sales/rental tax is due where possession is transferred from
lessor to lessee.

d. If an article of leased/rented property is used in more than one local taxing
jurisdiction in the same month, then the sales/rental tax is due to the local taxing
jurisdiction where the property is used for the longest period of time.

Lease of an automobile or motor vehicle.

a. For purposes of a local tax levy, the lease tax due on automobiles shall be due
to the jurisdiction where possession is transferred when the period of the lease is 180
days or less.

b. Where the lease period is more than 180 days, the tax shall be due to the
jurisdiction where the lessee resides in the case of an individual; in the case of a
business, the tax shall be due to the jurisdiction of the official domicile of the
business, unless the automobile is assigned, garaged, and used elsewhere.

In an instance where a legitimate disagreement exists as to which local taxing
jurisdiction is owed, the local taxing authorities involved shall resolve the credit due
among themselves through any legal means.

C.

Re-leases or sub-leases and re-rentals or sub-rentals, with the one exception
hereinafter noted, are also subject to tax. The tax does not apply to lease or rental
transactions involving immovables.

Specifically excluded from the definition of "lease or rental" is the lease or
rental of property to be re-leased or re-rented for the purpose of being used in
connection with the operating, drilling, completion, or reworking of oil, gas, sulphur or
other mineral wells. The lease or rental for re-lease or re-rental of casing tools, pipe,
drill pipe, tubing, compressors, tanks, pumps, power units, and other drilling or related
equipment qualifies for exclusion if the property is to be used for one of the specified
purposes. The re-lease or re-rental to the ultimate user is subject to tax.

The term lease or rental shall not mean or include a lease or rental of tangible
personal property to be used in performance of a contract with the U.S. Department of the
Navy for construction or overhaul of U.S. Naval vessels, nor the lease or rental of
airplanes or airplane equipment by a commuter airline domiciled in Louisiana.

D. A very limited exemption is provided to the operators of
motion picture theaters wherein the amount paid by operators to distributing agencies for
the use of film is specifically exempt from the sales and use taxes imposed by the local
ordinances. Note that film is the only item covered by the exemption. Distributing
agencies and suppliers selling to motion picture theaters are required to collect taxes on
any other supplies, materials or equipment furnished to operators. Theaters are required
to collect the tax on admission and the sales of snacks and refreshments.

E. The terms of the contract under which tangible personal
property is leased or rented shall be the basis for computing the tax. The tax is to be
computed and paid on the "cash receipts" basis, either lump sum at the time of
execution or on a monthly or periodic basis as provided in the contract.

F. A transaction which qualifies as a lease or
rental of movable property is taxable, regardless of whether or not the lessor or renter
(rental dealer who owns the property) is regularly in the business of leasing or renting
movable property. The taxable base includes the total charge to the lessee or the renter
(the customer who rents). Operating expenses and maintenance costs for keeping
rental/lease property in repair may not be deducted from gross proceeds in arriving at the
taxable base. Freight charges to deliver rented or leased merchandise to customers are not
taxable if separately stated on the rental/lease invoice. Delivery charges, if separately
stated, are exempt from tax even if the delivery was made by the renter's or lessor's own
trucks. The freight charges from the factory to the dealer renting or leasing the
equipment must be included in the taxable base if billed to the customer, even if billed
separately on the invoice, since this type of charge is a part of the dealer's cost and
should be included in the rental/lease fee.

G. Leases of tangible personal property take a variety of forms
(straight lease, lease-purchase, financial arrangement). The documentation may be
structured as a sale, but the parties may consider the transaction to be a lease for
financing or income tax purposes. In determining whether a transaction is a sale or lease
for sales and use tax purposes, the Finance Director will consider the actions and intent
of the parties and the supporting documentation. The following factors are indicative of a
sale rather than a lease:

Title passes to the lessee at the inception of the agreement

The lessee is obligated for the total amount of the purchase price regardless of seizure
by the lessor for nonpayment;

The sales price is established in the lease agreement;

The lessee has the right to apply lease payments against the purchase price;

The lessee has the responsibility to insure, maintain, service, and repair the property;
and

The total amount of the lease payments required to be made by the lessee is
approximately equal to the fair market value of the property plus reasonable finance
charges.

Generally, a lease agreement with an option to purchase is considered a "straight
lease" if at the end of the lease term, the lessee has an option to purchase the
equipment for an amount equal to or greater than fair market value. If the lessee has an
option to purchase the equipment for a nominal amount, less than fair market value, the
transaction is considered a lease-purchase.

H. Whether the owner of tangible personal property is in fact
renting or leasing the property or is in reality furnishing a non-taxable service, depends
upon the degree of control over the property retained by the owner. As an example, the
owners of various types of equipment, such as boats, draglines, trucks, tractors or
automobiles, may furnish the equipment to the user complete with an operator. In this
situation, the owner of the equipment is performing a non-taxable service, even though the person
paying the fee directs the specific use of the equipment. The owner, through furnishing
the operator, has retained sufficient control over the property to remove it from the
rented or leased category. The fact that a separate charge is made for the salary of the
operator is immaterial. The "sales price" or "cost
price" of tangible personal property purchased for the purpose of
furnishing equipment with an operator is not excluded from sales and use
tax. The provisions of Act 1266 do not apply to property furnished
with an operator.

I. The operator concept relative to equipment does not extend,
however, to advisory or engineering personnel furnished, with or without charge, when the
lessee has operations personnel assigned to the property. For instance, the fact that a
computer manufacturer furnished a full-time engineer, a full-time programmer, and a
full-time computer operator to an installation having its own programmers and operators
would not change the nature of the lease covering the equipment. Similarly, an engineer or
superintendent furnished with equipment does not alter the rental charges for use of the
equipment, if the owner would be unable to operate the equipment without personnel
furnished by the lessee.

(For a special rule relative to the rental or lease of certain heavy equipment,
see Rule 94.)

J. Beginning July 1, 1994, lessors of tangible personal
property to be used exclusively offshore, beyond the territorial limits of the State, are
not required to collect rental tax on such leases or rentals. The lessees are responsible
for remitting the taxes due directly to the proper taxing jurisdiction.

K. Effective July 1, 1996, automobiles purchased for rental
purposes and motor vehicles purchased for lease purposes are excluded from sales and use
tax. Only automobiles and motor vehicles are covered by this exclusion provided that the
vehicles are used exclusively for lease or rental purposes and all applicable lease and
rental taxes are collected and remitted on the rent or lease proceeds.

L. Retail sales of lease or rental equipment are subject to
sales tax.

Rule 36. Equipment and Supplies

A. Sales of tangible personal property to the
ultimate user or consumer are taxable. For example, sales of machinery, tools, belts, and
other equipment to a manufacturer, producer or contractor, or sales of furniture,
fixtures, supplies, stationery, equipment, appliances, instruments, and tools to stores,
shops, business establishments, offices, and professionals are taxable. Such sales are to
final buyers or ultimate consumers and are not sales for resale. If an item is originally
purchased for resale, but is later used or consumed by the business, the tax is due. To
further illustrate:

Sales to a millwright of shafting, pulleys, belts, saws, lathes, chisels, tools, and
similar articles are taxable. These articles are not purchased for resale.

Sales of concrete mixers, trucks, dozers, and other machinery, equipment, and tools to a
contractor are taxable retail sales. These articles are not purchased for resale since the
contractor consumes them in his business.

B. This rule applies to all manner of office machinery,
fixtures, equipment, and supplies, including by way of illustration and not limitation,
furniture, cash registers, typewriters, stationery, pencils, pens, ink, account books,
magazines, professional publications, calculating machines, dictaphones, computer
equipment, and other articles.

Rule 37. Sales for Further Processing

Sales of materials for the primary purpose of further processing into articles of
tangible personal property for subsequent sale at retail do not constitute retail sales.
This provision does not cover all materials which are used in any process by which
tangible personal property is produced, but only those materials which themselves are
further processed into tangible personal property. Whether materials are further processed
or are simply used in the processing activity will depend entirely upon an analysis of the
end product. Although any particular material may be fully used, consumed, absorbed,
dissipated, or otherwise completely disappear during processing, if it does not become a
recognizable and identifiable component which is of some benefit to the end product, it is
not exempt under this provision. The fact that the material remains as a recognizable
component of an end product by accident because the cost of removal from the end product
is prohibitive, or it was not "material for further processing," is irrelevant
and the tax is due.

Rule 38. Leased Departments

When a store leases some of its departments to other persons
for the selling of tangible personal property to consumers, each such leased department
shall make separate monthly returns if the lessee keeps his own books and makes his own
collections on account of sales at retail. If the store leasing such departments keeps the
books for the leased departments and makes collections on account of their sales, the
store shall, as agent for the lessee, include in its tax returns all taxes due by the
leased department, but the lessee shall not be relieved of liability in case the store
fails to make the proper returns or fails to remit the taxes due.

Rule 39. Wholesale Sales

Sales of tangible personal property by wholesalers to retailers, jobbers,
dealers, or other wholesalers for resale are not sales at retail and are not subject to
tax.

Rule 40. Fabrication

When a person or a business fabricates materials into tangible personal
property, the entire charge to the customer (materials and labor), is included in the
sales price. Fabrication is taxable whether the materials are provided by the fabricator
or by the customer. Examples of fabrications are as follows: portable buildings, signs,
storage tanks, etc.

When a contract is for the fabrication of tangible personal property that will be
permanently installed and become immovable, and if the fabricator is also the installer,
then the fabrication contract will be treated as a real property construction contract.
Tax is due on the cost price of the materials used and the labor is not taxable. If the
fabricator and the installer are different, then the total charge for the fabricated item
is taxable (materials and labor) and the separately stated installation charges are not
taxable.

Examples of fabrication of tangible personal property include coating,
wrapping, and galvanizing of pipe and other types of property which have not previously
been treated by these methods. Monogramming and engraving of tangible personal property
are also taxable as fabrication of tangible personal property.

Rule 41. Repairs to Tangible Personal Property

A. Repairs to tangible personal property are included in the
definition of sales of services, and all charges (parts, labor, travel, etc.) for such
repairs are taxable as sales of service.

B. For the purpose of the ordinances, tangible personal
property is movable property which may be seen, weighed, measured, felt or touched, or is
in any other manner perceptible to the senses, and includes machinery, appliances, and
equipment which have been declared immovable under the provisions of Article 467 of the
Louisiana Civil Code and all items which have been separated from land, buildings or other
construction permanently attached to the ground or their component parts, as defined in
Article 466 of the Louisiana Civil Code. All charges (parts, labor, travel, etc.) for
repairs to tangible personal property which have been declared immovable under Article 467
are taxable, whether the property is repaired at the dealer's shop or at the location of
the property. When the property defined in Article 466 has been separated from the land,
buildings or other construction permanently attached to the grounds, such charges are
taxable only when the property being repaired is removed from the property of the owner.
Items are considered permanently attached if they cannot be removed without substantial
damage to the items or to the property to which they are attached.

C. Repairs performed in this Parish are taxable even if the
repaired property is picked up and/or delivered to a customer outside the Parish. Repair
services performed outside the Parish are not taxable in this Parish, although the owner
of such property which has been repaired would owe a use tax, subject to a credit for
local taxes paid on the cost of the parts added by such repairs.

D. The sale of materials and parts to repairmen for use in
repairing tangible personal property for others when such materials and parts will become
a part of the article repaired are not retail sales and may be made under a Resale
Exemption Certificate. The sale of supplies which are consumed in the process of
performing the repair services without becoming a part of the articles repaired are
taxable retail sales.

E. Services rendered pursuant to service contracts and
maintenance agreements are deemed prepaid repairs and are subject to tax. Repairs made
pursuant to warranty for which no charge is made to the owner are not subject to tax
because the cost of the warranty is considered to have been included in the sales price of
the merchandise purchased upon which tax was due at the time of the sale.

F. The following examples of various repair transactions
illustrate the application of these rules. In each instance, the dealer is located in East
Baton Rouge Parish and the entire charges for the transactions (including without
limitation parts, labor, travel, etc.) are taxable.

TRANSACTION: Repair dealer picks up a forklift in New Orleans, repairs it in Baton Rouge
and then returns it to New Orleans.

TRANSACTION: Repair dealer repairs a backhoe, which has been declared an immovable by
XYZ Manufacturer in East Baton Rouge Parish.

TRANSACTION: Repair dealer picks up generators in Texas and Arkansas, repairs same in
East Baton Rouge Parish and then returns them via his own truck.

TRANSACTION: Repair dealer removes a ceiling fan from a restaurant, repairs it in his
shop and reinstalls same.

TRANSACTION: Repair dealer removes elevator lift motor from a building, repairs it in
his shop, then returns and installs same.

G. Repairs to tangible personal property for resale are exempt
from sales tax provided the repair dealer receives a Resale Exemption Certificate from his
customer. The repair dealer must collect sales tax when the customer cannot provide a
Resale Exemption Certificate.

Rule 42. Installation Charges

Persons selling tangible personal property which is to be permanently
affixed to real property and thereby become part of realty, who, in connection with such
sales, contract for the installation of the articles so sold, are vendors of the articles
and material to the same extent as is the case of articles sold without installation.
Vendors so selling and installing must make a separation of that portion of the price
which is for the tangible personal property sold and that portion of the price which is
for installation. Failure to so segregate such amounts subjects the entire amount to tax.

Rule 43. Repairs to Immovables

The repair of immovable property is not a taxable service. The repair dealer
is deemed to be the user or consumer of the materials and parts employed by him in
furnishing the service. If the repair dealer purchased materials or parts under a Resale
Exemption Certificate, but later uses or consumes the same in furnishing the service, he
must report and pay tax at the time they are so employed.

Rule 44. Advertising Agencies

Advertising services rendered by advertising agencies, design firms, and
print and broadcast media are not subject to tax, whether these services involve a
transfer to the client of tangible personal property or not. However, a sale to a client
of mass-produced advertising items by an advertising business which manufactures the items
itself is subject to tax. In no event shall charges for creative services which are
separately invoiced be subject to tax.

Rule 45. Aircraft

Aircraft, including but not limited to airplanes, helicopters, aircraft kits, ultra
lights, etc., are tangible personal property, the sale, lease or repair of which is
subject to tax with the following exceptions:

A. Antique airplanes are not subject to tax. The antique
airplane must be maintained by a private collector and not used for commercial purposes.
The term "antique airplane" is defined by Louisiana Revised Statute 47:6001 for
purposes of the exemption as an airplane manufactured at least 25 years ago.

B. The following information pertains to the lease and rental
of helicopters:

Any helicopter which is to be used directly in the exploration for, or the extraction or
production of, oil, gas, and other minerals, or helicopters used in providing services to
other businesses which are engaged in such activities, may be acquired through a lease
transaction and the entire transaction will be treated as a sale. The transaction may be
entitled a rental, lease, lease-purchase, sale and lease-back, or any other similar term.
In any case, the lessor or renter (rental dealer who owns the property) shall not incur a
sales or use tax liability on the acquisition of the helicopter for lease, nor on the
withdrawal of a helicopter from resale inventory to be placed in rental service, when the
lessee is engaged in the exploration or production of oil, gas, or other minerals, or
related service industries. Unlike rental transactions involving other tangible personal
property, the lease contracts involving such helicopters will not be required to contain
language which guarantees any rights of title to the lessee, nor will it need any
obligations to maintain the lease for its full term.

The sales tax due on such transactions shall be payable in equal monthly installments
over the entire term of the lease, rather than at the inception of the lease agreement as
with rental transactions involving other tangible personal property. In addition, unlike
conventional lease transactions, the tax is due and payable by the dealer/lessor for the
period the receipts are invoiced to the buyer/lessee, and not for the period in which
active collection is made.

Since these transactions are taxed as sales and not leases, the location of the intended
use of the helicopters would not determine taxability as would be the case in a rental
transaction.

Rule 46. American Red Cross

Any sales to or purchases made by the American Red Cross are exempt from taxation by
Congressional Act.

Rule 47. Places of Amusement, Clubs, Etc.

A. Charges for admissions to places of amusement,
entertainment, recreation, or athletic events, except those sponsored by schools, colleges
or universities, are classified as sales of services and as such are taxable. Note that
only those events which are sponsored by schools, colleges, and universities are exempt.
The same admission charges by charitable, religious, social, and other organizations are
taxable, unless specifically exempted under some other provision. The term "sales of
services" shall not include dues and membership fees of nonprofit civic organizations
such as YMCA, CYO, YWCO, and nonprofit museums.

B. Fees or other consideration and dues paid for the privilege
of obtaining access to clubs are similarly classified as sales of services. Such dues,
fees, or other consideration are taxable even though some personal services may be
rendered by the owner of the club after access thereto has been obtained. Dues, fees, or
other consideration paid for the privilege of having access to places of amusement,
entertainment, athletic, or recreational facilities are also included in the definition of
sales of service.

C. The cost of stock or certificates of membership required to
be purchased prior to becoming a member of a club is not included in sales of services if
the club member has the prerogative of disposing of the stock or certificate of membership
when he ceases to utilize the club or facilities. If a person is required to surrender his
stock or certificate of membership upon leaving a club, then the purchase price is
considered nothing more than a fee for his participation and is classified as sales of
services.

Rule 48. Art Objects

Sales of objects of art are sales of tangible personal property and are
taxable.

Rule 49. Auctioneers, Agents, Factors, Etc.

A. Every factor, auctioneer or agent acting for
either a known or an unknown or undisclosed principal, entrusted with any bill of lading,
customhouse permit or warehouseman's receipt for delivery of tangible personal property or
entrusted with the possession of property for the purpose of sale, shall be deemed the
owner thereof for the purpose of sale, and upon the sale at retail of such property, such
factor, auctioneer or agent shall be required to collect the sales tax thereon and remit
it to the Parish. The same rule applies to lien holders, such as storage men, pawnbrokers,
and artisans.

B. The provisions of this rule shall not apply to trustees and
auctioneers at bankruptcy auctions, since such transactions are casual sales.

Rule 50. Automobile and Aircraft Dealer's Demonstrators

The sale at retail, the use, the consumption, the distribution, and the storage to be
used in the Parish of the following are exempt from tax: new trucks, new automobiles, and
new aircraft withdrawn from stock by factory-authorized new automobile and new aircraft
dealers, and used trucks and used automobiles withdrawn from stock by new or used motor
vehicle dealers, with the approval of the Secretary of the Department of Revenue and
titled in the dealer's name for use as demonstrators are exempt from tax. However,
when such vehicle or aircraft is sold, tax shall be collected. The term
"demonstrator" will be construed in its narrowest sense and is limited to use
for the purpose of demonstrating its qualities to prospective customers. The demonstrators
cannot be used by members of the family of dealership personnel nor can the units be used
to run errands or for pleasure purposes.